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PVR gains in Q3 from consolidation of operations with Cinemax

MUMBAI: Delhi-based multiplex chain operator PVR Limited (PVR) has put up a strong show during the quarter ended 31 December 2013. However, the company has consolidated Cinemax’s operations with itself and, hence, the results are not comparable.

Due to the clubbing of Cinemax’s operations, PVR’s consolidated net profit jumped 55 per cent to Rs 14.16 crore (Rs 141.6 million) in the fiscal third quarter. Turnover stood at Rs 337.29 crore (Rs 3.37 billion), up 68.7 per cent from the earlier year.

Post consolidation of Cinemax properties, PVR operates 408 screens spread across 39 cities in India.

Improvement in the movie exhibition business and higher contribution from gaming and restaurant activity lifted PVR’s topline and more importantly helped to boost operating margin.

Increase in average ticket price (ATP) and sponsorship revenues pushed movie exhibition business to Rs 316.18 crore ( Rs 3.16 bn) in the quarter, up 73.2 per cent. Movie exhibition revenues continued to dominate the company’s revenue pie and accounted for 94 per cent of total income.

Gaming and exhibition revenue, the second largest contributor to total income, grew 39.4 per cent to Rs 17.24 crore ( Rs 172.4 mn).

Higher operating expenses and burgeoning finance costs, on the other hand, have been a big dampener.

Consolidated operating expenses jumped substantially, led by a higher share of film distributors followed by rent, electricity bill, employee cost, cost of material consumed and other expenses.

Operating expenses surged 73.9 per cent to Rs 287.98 crore ( Rs 2.88 billion) as share of film distributors increased from Rs 83.34 crore ( Rs 833.4 million) compared to Rs 43.34 crore ( Rs 433.4 million) a year ago.

Consolidated EBITDA increased 43.7 per cent to Rs 49.31 crore ( Rs 493.1 million) and translated into an EBITDA margin of 156 per cent vis-a-vis EBITDA margin of 17.2 per cent in the same period last year.

Higher interest outgo of Rs 20.66 crore ( Rs 206.6 million) further dented PVR’s profitability, but higher other income at Rs 2.10 crore ( Rs 21 million) and tax credit of Rs 4.05 crore ( Rs 40.5 million) prevented consolidated profit from falling further.

On a standalone basis (multiplex business excluding Cinemax), PVR’s third quarter revenue stood at Rs 223 crore ( Rs 2.23 bn), up 20.4 per cent. In the third quarter, the company benefited from strong box-office collections with hits like ‘Dabangg 2’, ‘Son of Sardar’, ‘Talaash’ and ‘Jab tak hai Jaan’. PVR saw footfalls of 9.66 million, a growth of just 6.7 per cent. This is despite having a higher number of seats. If compared on a like to like basis (number of properties operational), footfalls have actually fallen 16 per cent.

PVR’s standalone EBITDA declined 3.4 per cent to Rs 32.3 crore ( Rs 323 mn) on account of lower revenue. EBITDA margin of 14.4 per cent showed a contraction of 360 basis points.

Profit before tax stood at Rs 7.19 crore ( Rs 719 mn), primarily led by higher interest payout and lower other income. Tax credit of Rs 5.5 crore ( Rs 55 mn) lifted profit after tax to Rs 12.69 crore ( Rs 126.9 mn).

Average seats operational increased 21 per cent amid slower pace of footfall growth. Average ticket price showed an increase of four per cent to Rs 181.

PVR’s share price fell 11.15 per cent to Rs 536.40 per share on the BSE. More than 1.57 lakh shares exchanged hands on the counter.